Judge: Jon R. Takasugi, Case: 22STCV36657, Date: 2023-10-24 Tentative Ruling

Case Number: 22STCV36657    Hearing Date: October 24, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

            Defendant’s motions to compel arbitration are GRANTED. Defendant’s requests for attorney fees are denied.

On 11/21/2022, Plaintiff Howard Weiss (Plaintiff), as an individual and as the assignee of HRW Legacy, LLC, filed suit against SNF Manager, Inc. and Mecebar, LLC, alleging: (1) securities fraud violation of California Blue Sky Laws (collectively, Defendants); (2) common law fraud; and (3) breach of fiduciary duty.

Now, Defendant moves to compel arbitration of Plaintiff’s Complaint, and to stay all further proceedings in this case until the completion of arbitration.

There is a substantially similar motion to compel arbitration pending in Case No. 22STCV40951. For ease, the Court has consolidated its analysis into a single ruling.

Discussion

            Defendant submitted evidence that on 8/21/2017, Plaintiff entered into a written contract with Defendants that contained an arbitration provision which covers the claims asserted here and in Case No. 22STCV40951.

            In opposition, Plaintiff notes that he does not dispute that these claims should be arbitrated, and he himself initiated arbitration proceedings in November 2022. Plaintiff further argues that it is Defendant who has delayed arbitration of this matter:

Defendants have prevented Plaintiff from arbitrating their claims at every point to achieve their goals. Defendants refused to provide an executed copy of the Mecebar Operating Agreement to JAMS so arbitration proceedings could be initiated. Defendants did not want an Arbitration initiated to bolster their Demurrer based on the Statute of Repose. The Defendants’ Demurrer caused JAMS to stay the arbitration sought by Plaintiff. The Motion was used to stay arbitration further. 

After Defendants’ Demurrer was overruled, Defendants filed the Motion on July 10, 2023. The Motion was another ploy to delay arbitration proceedings. After it was filed, Plaintiff contacted JAMS to initiate arbitration proceedings. Defendants objected and requested that JAMS continue to stay any arbitration proceedings. Thus, the only practical effect of this Motion has been to delay the very arbitration the Motion seeks to compel

Plaintiff does not need to be compelled to participate in the Arbitration they initiated. The Plaintiff filed a Demand for Arbitration before filing his lawsuit. It is the Defendants who should be ordered to arbitrate “any and all claims and causes of action in the Superior Court Action … proceed in the Arbitration Proceedings and Judgment upon the award rendered by the Arbitrator in the Arbitration Proceedings may be entered in this Court.

            (Opp., 1:13-28.)

            Given that Plaintiff does not dispute that the claims in this action and in Case No. 22STCV40951 should be arbitrated, this leaves only Defendant’s request for an award of attorney fees for bringing this motion, pursuant to CCP section 1293.2.

The California Supreme Court in DisputeSuite.com, L.L.C. v. Scoreinc.com (2017) 2 Cal. 5th 968, 977 and other recent California appellate courts have held that prevailing in an interim procedural step, such as a motion to compel arbitration, within an existing lawsuit, cannot be the basis of attorney’s fees award. The DisputeSuite court announced the generally applicable principle: "fees under section 1717 are awarded to the party who prevailed on the contract overall, not to a party who prevailed only at an interim procedural step."

Similarly, in Lachkar v. Lachkar (1986) 182 Cal.App.3d 641, the Court expressly held that a petition for order to compel arbitration was not judgment, such as would entitle petitioners to costs and attorney's fees. The Court in DisputeSuite endorsed this the Lachkar interpretation that “A party does not become the prevailing party under the statute merely by obtaining a forum for resolution of the contractual dispute or by moving it from one forum to another.”

Here, there has been no determination on the merits of the underlying contract claims here. As such, Defendant is not entitled to attorney fees. The Court also declines to award Plaintiff attorney fees, given insufficient evidence to show obstruction and delay by Defendant.

Based on the foregoing, Defendant’s motion to compel arbitration is granted. This action is stayed pending the completion of arbitration proceedings. 

It is so ordered.

Dated:  October    , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  For more information, please contact the court clerk at (213) 633-0517.